Lockheed Martin Corporation (LMT) has received a contract from the U.S. Navy worth $80.2 million for the supply of MK 41 Vertical Launching Systems (“VLS”) for DDG 51 Class Aegis destroyers. Under this firm-fixed-price contract, Lockheed will also provide launcher spares, upgrade kits and installation equipments.
The MK 41 VLS is combat proven with more than 3,500 successful missile firings. It is a missile launch system installed below deck onboard surface ships providing capability to fire a variety of missiles including anti-air, anti-submarine, surface-to-surface, and strike.
The MK 41 system continues to meet the challenges of increasingly complex emergent threats. It has revolutionized the U.S. and Allied navy's sea-launched weapons while providing capability to respond to numerous warfare threats from the same weapons platform. At present, 12 navies are using the system globally with 186 ships in 19 different ship classes. More than 12,000 MK 41 VLS missile cells have already been delivered, and additional launchers are on order.
Lockheed Martin Corporation is expected to register a stable performance due to a leveraged presence in the Army, Air Force, Navy and IT programs. Moreover, the company’s focus on debt repayment, its ongoing share repurchase program and the incremental dividend will continue to boost shareholder return.
However, defense budget cuts, headwinds in margins, higher pension liability and risk regarding retrenchment cost recovery are a matter of concern for the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Bethesda, Md., Lockheed Martin is a global security company, principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The company mainly competes with Northrop Grumman Corporation (NOC) and Raytheon Co. (RTN).
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